Friday, January 29, 2010

On February 1, Ukraine’s two presidential candidates will meet for their first and only official debate. Or at least that’s the plan, according to the Central Election Commission.

In reality, it's highly likely that one of the candidates – Viktor Yanukovych – will skip the event, which his campaign deems unnecessary. Although he debated Viktor Yushchenko in the 2004 presidential election, Yanukovych said his current opponent, Prime Minister Yulia Tymoshenko, would do better to “demonstrate her whims in the kitchen.”

Yanukovych’s deputy Hanna Herman avoided her candidate’s food-themed reasoning, suggesting instead that “There is nothing for Victor Fedorovych [Yanukovych] to talk about with Tymoshenko.” The implication, of course, is that Yanukovych also didn’t wish to use the time allotted to explain his policies directly to viewers without a filter.

In what must have been an attack on the Prime Minister, Herman continued, "Viktor Yanukovich does not wish to compete with [Tymoshenko] in a contest of beautiful lies." Herman didn’t explain why Yanukovych could not simply tell the truth.

Regardless, this refusal to debate contradicts Herman’s earlier promise to do just that – “definitely.”

Many in Ukraine are not surprised by this position. Given Yanukovych’s past verbal challenges, as well as his approximately 10 point lead, the choice has merit. Rather than risk a lashing by the sharp, quick, acid-tongued Tymoshenko, followed by the unflattering sound bytes and critique, better just to let her talk to viewers. It is the safest position, and Yanukovych’s chief aim is clearly to protect his lead.

Tymoshenko’s response to Yanukovych’s debate avoidance is just as expected. "If you don't think you have the brains and political experience to take part in televised debates,” she said, “you should admit that you are not ready to lead the country, rule it or represent it in the world.”

There may be a lot that Yanukovych would like to avoid discussing. He has either vacillated or been unable to effectively articulate his positions on a number of policies in the last week – including support for a gas pipeline that would bypass Ukraine from Russia, his views on Russian investment in state industries, the status of the Russian Black Sea Fleet, and his position on various CIS trade and economic configurations.

In fact, a debate could go a long way toward clarifying both candidates’ positions on these and other important policy points. Debates, of course, are not necessarily only about jousting with your opponent. They provide a candidate with the opportunity to explain their positions side-by-side with their opponent in order to allow the voters to see the clear differences and similarities. Yanukovych, it seems, is not prepared to do this. For a man who recently has touted his interest in closer cooperation with Europe—where debates are normally required—this is a politically understandable but unfortunate choice.

Tammy Lynch is a Senior Research Fellow at Boston University's Institute for the Study of Conflict, Ideology & Policy. Twitter: @TammyLynch.

Thursday, January 28, 2010

As it has already been reported, Georgia’s former prime minister who now leads the opposition Movement for a Just Georgia, Zurab Noghaideli, visited Moscow several times in December 2009 (http://jamestownfoundation.blogspot.com/2010/01/former-prime-minister-zurab-noghaideli.html). During one of his visits to the Russian capital, he was received by Prime Minister Vladimir Putin and this was the first time that the Russian leader openly met with a Georgian oppositionist.

The 45-year-old Zurab Noghaideli served as prime minister of Georgia under President Mikheil Saakashvili from February 2004 to November 2007, when he resigned, citing poor health condition. Before his premiership, he was a member of Georgian Parliament (1992-2000) and the minister of finance (2000-2002) under ex-President Shevardnadze. For one year before the November 2003 Rose Revolution, which resulted in Shevardnadze’s resignation, Noghaideli was involved in entrepreneurial activity before once again becoming the finance minister in early 2004 under the newly-elected President Saakashvili. During his tenure as prime minister, Zurab Noghaideli rarely expressed his views on Georgia’s foreign policy, concentrating almost exclusively on economic issues. The same is true for the one-year period following his resignation, between November 2007 and December 2008, when he emphatically stayed out of politics and engaged himself in business activity instead.

Zurab Noghaideli’s ascendance to political personality came shortly after Russia’s military aggression against Georgia in August 2008 when he started to slowly accelerate his rhetoric against President Saakashvili’s domestic and foreign policies. In December 2008, he established his own opposition party, the Movement for a Just Georgia (http://www.civil.ge/geo/article.php?id=20139). Unlike Georgia’s ex-speaker of the Parliament Nino Burjanadze and the former envoy to the U.N. Irakli Alasania, though, Noghaideli was only tangentially involved in three-month-long opposition protests in mid-spring to early summer 2009, aimed at President Saakashvili’s resignation. After the street protests failed, he then started to exploit the window of opportunity presented by now politically bankrupt radical oppositionists who had refused to enter Parliament and wanted to promote their agenda through questionable and semi-legal ways. This background is important in order to better understand Noghaideli’s growing clout over Georgia’s fragmented and disarrayed non-parliamentary opposition parties.

Unlike other oppositionists who ostensibly presented themselves as pro-Western politicians—but still adamantly tried to get rid of the pro-Western Saakashvili government—Noghaideli has not shied away from being seen as an openly pro-Russian figure. And while other exes and formers, such as Burjanadze and Alasania, found it necessary to travel to Western capitals to promote themselves as pro-Western and pro-NATO “alternatives” to President Saakashvili (even during the notorious street protests last year), Noghaideli’s major travel destination has almost exclusively been the Russian capital, leaving no doubt about his political taste and foreign policy orientation. This is by far the biggest difference between the ex-prime minister and all of the other opposition figures.

By no means does this mean that Noghaideli has already monopolized the Russian favor or that other oppositionists have not clandestinely tried in the past or will not openly attempt in the future to gain Moscow’s political backing and financial support. What this means is that Noghaideli is first to openly present the Georgian public with a real alternative to what President Saakahsvili stands for; a U-turn in Georgia’s foreign policy direction. Noghaideli’s neutrality agenda which is in fact a euphemism for alliance with Russia has already sent powerful shockwaves to the largely pro-U.S. and pro-NATO Georgian public but there are several reasons why “the Noghaideli alternative” could soon become a significant portion of Georgian society in a real and palatable way.

77% of Georgians supported their country’s NATO membership in a plebiscite held in January 2008 (http://www.civil.ge/geo/article.php?id=17323). Alas, this indisputable public support along with the Georgian government’s considerable contributions to the allied operation in Afghanistan and the advantages presented by Georgia’s location in the strategically important Caucasus region—where the West’s and Russia’s geopolitical interests traditionally collide—was not enough to secure an action plan leading to NATO membership.

What Georgia received in its place at the NATO Bucharest summit in April 2008 was the Western leaders agreeing that someday that country would become a member of NATO. Moscow assessed the Alliance’s indecisiveness as a signal to act as soon as it could to change Tbilisi’s foreign policy orientation, and the military aggression against Georgia followed in a mere four months after the Bucharest summit. Although Russia failed to bring about a “regime change” in the Georgian capital, the ongoing occupation of Georgian territories in Abkhazia and Tskhinvali is a handicap already obstructing Georgia’s road to membership in the Alliance, notwithstanding the fact that until a pro-Western force remains in power in Tbilisi, Russia’s victory in the August war will be seen as partial and potentially reversible.

The Georgian public’s disappointment with the West’s inability to prevent the Russian aggression has further deepened, as no connection is seen to be made between full restoration of NATO-Russia cooperation and de-occupation of the Georgian territories. With the NATO-Russia military-to-military cooperation now revitalized (http://www.nato.int/ims/news/2010/n100126a-e.html), Georgians’ sense of abandonment and disillusionment is growing, leaving ample room for those who advocate rapprochement with Russia at the expense of Georgia’s foreign orientation.

Analysts argue that only the United States’ and Europe’s closer engagement with Tbilisi and greater participation in solving Georgia’s outstanding problems with its northern neighbor could prevent a U-turn in Georgia’s foreign policy which would thwart both Georgia’s historical chance to reunite with the West and the West’s goal to promote peace, security, cooperation and democracy in Eurasia.

Wednesday, January 27, 2010

Spy scandals involving Russian intelligence successfully penetrating or attempting to penetrate the upper echelons of government in NATO-member states that recently joined the alliance have made headlines on numerous occasions.

In the tiny Baltic state of Estonia, authorities arrested Herman Simm, the former head of the country’s National Security Authority who was arrested in September, 2008, and later tried and convicted in February, 2009 after pleading guilty to charges of passing NATO-related secrets to Russia’s SVR civilian foreign intelligence service. http://www.nytimes.com/2008/12/25/world/europe/25estonia.html?_r=1

Although Polish authorities managed to keep news of the arrest quiet for nearly a year, in early January the Polish media broke the story and it was learned that the GRU spy was probably a deep-cover mole who reported directly to GRU headquarters in Moscow, rather than being run via the Russian embassy in Warsaw.

Polish media citing local government sources say the agent had been living in Poland for approximately a decade and had been granted permanent resident status. If true, his infiltration would happen to coincide with Poland joining NATO in March, 1999.

In the neighboring Czech Republic, local authorities have been rather unsuccessful in hunting down and exposing Russian spies that have operated as diplomats, or as deep-cover agents. This, despite the fact that according to the Czech security service (BIS), two-thirds of the 200 or so Russian diplomats accredited with the Czech foreign ministry are doing more than issuing visas and enjoying the benefits of duty-free shopping.

In fact, Czech officials claim they had enough evidence to expel up to five Russians, however they refrained from doing so out of concern that the Kremlin would retaliate by expelling an equal amount of Czech spies operating under diplomatic cover in Moscow, effectively ending any and all Czech intelligence gathering activities on Russian soil.

It appears that the only time the Czechs, notorious for their passive aggression and reticence seem to act against a Russian spy operating on their turf is when that spy fails to recruit a local citizen, gets drunk and physically assaults two policemen in the process.

For illustration purposes let’s look at the case involving former Russian defense attaché to the Czech Republic Alexander Sketin who in 2006 attempted, and failed to recruit a Czech scientist, became frustrated, drank too much, verbally assaulted the scientist, and physically assaulted two policemen called to the scene. Sketin was later declared persona non grata by Czech authorities, and was unceremoniously expelled from the country. http://zpravy.idnes.cz/rusky-spion-verboval-ceskeho-vedce-du4-/domaci.asp?c=A071121_221035_domaci_mia

More recent antics of Russian spies operating on Czech soil, however, seem to involve less violence, and more romance.

In mid-December, 2009 the Czech defense ministry announced to the media the departure of three Czech army generals who submitted their resignations due to various inadequacies and incidents occurring within the military for which they felt responsible. One of the three was Major General Josef Proks who was considered by insiders to be one of two top candidates for the next Chief of General Staff of the Army of the Czech Republic.

What Proks, who is married with children, neglected to tell the world concerned a romantic affair he was having with a certain female Czech army Lieutenant-Colonel assigned to General Staff Headquarters. We all have secrets.

It seems the Czech Lt-Col had hers as well. According to well-informed Western diplomatic sources familiar with the Proks case, the Lt-Col had a number of simultaneous lovers, one of which happened to be a GRU officer working out of the Russian embassy in Prague.

Although it is not known when the affair began, what is known is that Proks, as the number two man in the Czech military, he had access to many NATO-related secrets pertaining to the national security of numerous countries since he held the highest-possible security clearance.

Tuesday, January 26, 2010

Ukraine’s presidential election campaign took an odd turn on Monday, when a printing press responsible for producing ballots was bizarrely raided.

As the video above from Ukrayinska Pravda demonstrates, a group of plain-clothed men smashed windows and pushed through the doors of the printing press – all calmly, quietly and in full view of what appears to be their own personal videographer. They appear to have had no purpose but to enter the building. Interior Ministry troops (loyal to presidential candidate and PM Yulia Tymoshenko) arrived, removed them and detained 22 individuals “who did not enjoy parliamentary immunity.”

Earlier, a group of deputies from candidate Viktor Yanukovych’s Party of Regions had barricaded themselves in the building in response to an attempt by the government to confirm a new director of operations. These deputies can be seen in the video calmly photographing the raid from inside the building. No one in Ukraine appears to know (or is prepared to say) who hired the men.

In other words, this was just an ordinary campaign day in Ukraine.

Complicating the already confusing incident, the Prosecutor-General’s Office now appears to have opened two criminal cases against police officers who were on the scene. Interior Minister Yuriy Lutsenko suggested that the officers were being charged with assault during the raid. He pointed to the video of the incident (above) showing the officers simply observing the event and called the PGO’s actions “political.” The PGO in the past has been aligned both with President Viktor Yushchenko and Viktor Yanukovych.

International observers have confirmed that they will now monitor the printing of ballots at this particular press, and despite this confusion, independent observers doubt that the ballots will be compromised. Over the last several years, Ukraine’s various parliamentary and government factions have developed a habit of fighting for control of public buildings in Kyiv.

In fact, the political battles, as well as fights within the parliament chamber itself, normally serve as interesting but unproductive diversions from the seemingly never-ending political campaigns that Ukrainians have endured since 2004.

The current campaign in advance of the February 7 election run-off is proceeding in a typically chaotic manner, as PM Yulia Tymoshenko tries to find some way to erase the 10 point lead earned by her challenger in the first round.

Viktor Yanukovych seems to be sitting pretty, protecting his lead while staying as far away as possible from tough questions, complicated situations, and challenger Tymoshenko.

While he cannot be forced to state clear opinions on the gas and BSF issues, of course, it appears that his last request will not be headed. Tymoshenko will not be forced into her kitchen. The Central Election Commission on Monday ruled that the candidates must debate on February 1 – if the building is secure, that is.

Monday, January 25, 2010

The Georgian and Russian churches have long found themselves heavily involved in political antagonism affecting almost all segments of the broad divide between pro-Western Georgia and increasingly isolationist and irredentist Russia. During the war between the two countries in August 2008, the Georgians and the Russians as well as their respective churches defended national interests as Patriarch Ilia II of Georgia gave his full support to his nation’s sovereignty and territorial integrity and the Russian Orthodox Church wasted no time to wholeheartedly subscribe to the official line of the Kremlin.

In August 2009, one year after Russia’s military aggression against Georgia, the two churches once again commemorated the war in the way they thought would best suit their countries’ national interests. Addressing a large gathering in Tbilisi’s Holy Trinity Cathedral, the Georgian patriarch said on August 7, 2009: “We respect Russia and its culture, but we will never come to terms with a loss of territorial integrity; on this issue, we have national consensus” (http://itv.ge/?p=19107). His statement was sharply distinct from what Russian Patriarch Kirill I said the following day. Calling the events of August 2008 “a tragedy for three fraternal Orthodox peoples [Russians, Ossetians and Georgians],” he put blame on “the evil political will” and accused Georgia of committing “aggression” against “the defenseless town [of Tskhinvali]” and “the Russian peacekeepers who acted in compliance with the international agreements” (http://www.rosbalt.ru/2009/08/08/661815.html).

The two religious organizations’ incompatible assessment of the Russo-Georgian war would not necessarily come as a surprise to those who are well familiar with the Georgian Church’s long history of support for Georgia’s independence and the Russian Church’s historical endorsement of Russia’s imperial expansion and domination over the vast Eurasia landscape. But the way that Patriarchs Ilia II and Kirill I have reacted to the recent natural calamity in Haiti could show more than national allegiance and patriotic symbolism.

On January 16, four days after the poor Caribbean nation was hit by a catastrophic magnitude 7.0 earthquake claiming between 100,000 and 200,000 lives and as the whole world was trying to help alleviate the suffering of the Haitian people, Russian Patriarch Kirill I said something unthinkable while on his three-day trip in Kazakhstan where he met with that country’s leadership as a political component of his visit. As reported by Russian media, he literally blamed the Haitians for incurring God’s wrath on themselves. “Haiti is a country of poverty and crime, famine, drugs and corruption, where people have lost their moral face,” Kirill was quoted as saying, “I've visited the island divided between two countries, the Dominican Republic and Haiti. One of them is developing, while the other is affected by crimes, economic recession and political unrest; that part of the island was shattered by the earthquake” (http://www.themoscowtimes.com/news/article/patriarch-blames-crime-and-drugs-for-haitian-quake/397763.html).

Commenting on the issue in his article “We Have Shocked Everyone,” Dmitry Shusharin, a famous Russian political analyst, called Patriarch Kirill’s derogatory words towards Haiti a statement by “a top-ranking political figure” and tried to interpret them as a manifestation of Russia’s growing marginalization and isolationism. “Any nation’s name can be put in a cliché” that was used toward the Haitians, Shusharin wrote (http://www.grani.ru/Politics/Russia/m.173531.html). In the same article, he also suggested that the Russian patriarch’s words could explain “why Russia provided very insignificant aid to Haiti compared to other countries.”

Russia’s spiritual leader’s remark in Kazakhstan on the Haitian tragedy immediately found a huge wave of repercussions in Georgia’s media and public discourse. And not just because Georgia is located in the seismically active Caucasus region—one which is no stranger to earthquakes—or because rising xenophobia and racism, and now an odd religious-environmental prejudice in Russia would not bode well for its smaller neighbors, including Georgia. As a matter of fact, Kirill’s statement occurred at a time when the Georgian government had already dispatched humanitarian aid and a 20-men-strong rescue team to Haiti on January 14 and the Georgian public was in preparation for a gala concert and telethon in support of the Haitian earthquake victims (http://rustavi2.ge/news/news_textg.php?id_news=35216&pg=1&im=main&ct=0&wth= ).

On January 22, the Georgian charity foundation Iavnana, headed by the famous Georgian opera singer Paata Burchuladze, organized an event in Tbilisi which featured several renowned opera personalities of international acclaim including the Argentine Marcelo Raúl Álvarez, the American Michèle Crider and the Italian Ambrogio Maestri as well as Burchuladze himself (http://rustavi2.com/news/news_textg.php?id_news=35320&pg=1&im=main&ct=0&wth=). Among the attendees was the Georgian Patriarch Ilia II who is known for his penchant for opera, and music and art in general and has himself written several religious hymns and chants. Addressing the audience, the Georgian patriarch said: “May God bless Haiti and its people” (http://www.fact.ge/news.aspx?i=d2865e99-c709-4409-a0ef-599490ad7bf1).

According to information recently made public by the Russian patriarchate, Russia’s religious leader is planning to visit Georgia “to keep and strengthen ties between the peoples of Russia and Georgia” and “to retain the unity of the faith which ties us together” (http://www.regnum.ru/news/1240850.html). Patriarch Kirill’s ill-thought expression on Haiti could soon become yet another reason for the growing liberal movement in Georgia to oppose his visit. This is in addition to Kirill’s ambiguous position on Georgia’s sovereignty and territorial integrity and his continuous courting of the “leaders” in the Russian-occupied Georgian regions of Abkhazia and Tskhinvali, which is by far the primary reason for pro-Western and patriotic forces in Georgia to mobilize against his trip in the first place (http://www.rian.ru/p_anonce/20090202/160786484.html).

Analysts believe that as the Russian leadership is trying to “legitimize” its territorial acquisitions at the expense of Georgia’s sovereignty – and with that “a sphere of privileged interest” in Eurasia – and poor countries in Latin America, the Pacific and elsewhere are seen by the Kremlin as potential subscribers to a newly created “reality,” statements similar to those the Russian patriarch made in regards to Haiti would only hurt Russia’s efforts in Third World countries.

Funeral servicesInternment will be atArlington National Cemetery with full military honors.Details will be provided on this pageas soon as they are available.

Вічна Йому пам'ять!

The Jamestown Foundation is eternally grateful for Roman's immense contributions to our organization, and in particular to the creation of this blog. We offer our deepest condolences to his friends and family.He will be greatly missed.

On January 14, 2010, Russian media reported this country’s Deputy Minister of Internal Affairs Colonel General Arkady Edelev as saying that “foreign instructors are preparing terrorist groups on Georgian military bases to carry out terrorist acts in the territory of the Russian Federation” (http://lenta.ru/news/2010/01/14/reveal/). Yet another accusation against Tbilisi, this one was voiced by the high-ranking Russian official during his meeting in Vladikavkaz, the North Caucasus, with representatives of the local law-enforcement agencies. Warning of “the Georgian threat,” Edelev reportedly told his audience that the alleged “terrorist groups were capable of destabilizing [the Russian republics of] North Ossetia, Ingushetia, Dagestan, Chechnya, Kabardino-Balkaria, and Karachay-Cherkessia” in southern Russia.

Covering the same story, the influential Russian news agency RIA Novosti said on January 15 that this was not the first time that the Russian official tried to link Georgia to international terrorist organizations. In October 2009, Russia’s powerful Director of the Federal Security Service (FSB) Alexander Bortnikov had accused the Georgian intelligence of “helping Al Qaeda emissaries to transfer terrorists to Chechnya and weapons to Dagestan” (http://www.rian.ru/incidents/20100115/204659331.html). In early January the Dagestan section of the FSB named Georgia among foreign states “funding guerrilla groups in Dagestan” (http://www.civil.ge/geo/article.php?id=22194&search).

A little earlier, in September 2009, during his illegal visit to the occupied Georgian city of Tskhinvali, Russian Foreign Minister Sergey Lavrov had lashed out against Tbilisi, accusing it of “preparing terrorist acts and provocations against South Ossetia and Abkhazia” (http://www.rian.ru/defense_safety/20080915/151279743.html). In August 2008, the FSB’s Center for Public Relations had announced that “the Georgian intelligence services were recruiting and sending guerrillas to Russia to engage in subversive activity” (http://www.grani.ru/Politics/Russia/m.173274.html).

As it has already become a “tradition,” every time Moscow accuses Georgia of some kind of conspiracy, Tbilisi finds it necessary to come up with yet another statement in an attempt to expose the fallacy and absurdity behind the Russian accusation. Commenting on the most recent Russian charge, the Georgian foreign ministry stated on January 15 that “the Kremlin was trying to fabricate a reason to strain to a maximum the situation on the Georgian borders and create conditions for provocations against the sovereign nation” (http://www.mfa.gov.ge/index.php?lang_id=GEO&sec_id=59&info_id=11446).

Arguably, the Kremlin has significantly intensified its efforts to discredit Georgia after the pro-Western Saakashvili government pledged to help militarily the United States and NATO in Afghanistan and committed itself to have just about 1,000 combat troops by February 2010 to strengthen the coalition forces in the war-torn country (http://jamestownfoundation.blogspot.com/2009/11/georgia-sends-combat-troops-to.html). Georgia’s international activism and anti-terrorism efforts, apparently, go against Russia’s long-time desire to isolate Tbilisi internationally and make it an easy prey for manipulation and ultimate domination.

Moscow is also trying to explain “convincingly” to its own domestic audience the reasons behind its persistent failure to bring order and stability to the North Caucasus. By accusing Georgia of “assisting the guerrillas,” the Kremlin arguably wants both to vilify the Georgian government in the eyes of the Russian people and to put blame on others for its own shortcomings and incompetence.

While it’s true that Tbilisi has limited tools to counter the escalating trajectory of Russian accusations, apart from verbal denunciations and counterclaims, the Georgian government could also make use of several other mechanisms. For instance, it could intensify its efforts to put more international observers on Georgian soil alongside those already present from the European Union Monitoring Mission (EUMM), urgently requesting its extension to the Russian-occupied Georgian provinces of Abkhazia and Tskhinvali, as the EUMM’s mandate requires.

Also, the Georgian government could demand from the Russian Federation to present verifiable evidence and a detailed account of Georgia’s “terrorism activity” so that the international community could see where the truth lies. The Geneva negotiation format, which is currently the only meeting format between the Georgians and the Russians, could be used for this purpose. In addition, the Georgian government should double its efforts to raise international awareness about ethnic cleansing, brutal persecutions, kidnappings and other acts being committed by the Russian forces and their local proxies in the occupied Georgian territories. Overall, the international community’s closer engagement and more alert attitude toward the deteriorating situation in the Caucasus could positively influence Russia’s behavior now and turn it into a more responsible actor in the coming future.

Monday, January 18, 2010

Although only 92% of the votes have been counted in the first-round of Ukraine's presidential election, it is now clear that former PM Viktor Yanukovych will head into round two with a lead over current PM Yulia Tymoshenko that borders on insurmountable.

The man discredited as President Viktor Yushchenko's opponent in 2004 has successfully propelled himself back to the top of the Ukraine political elite.

It appears the final results of round one will find Yanukovych with around 35% of the vote to Tymoshenko's 25%. In third place is Yanukovych's 2004 campaign manager and former central bank head Serhiy Tyhypko with 13%.

This election means that President Viktor Yushchenko now officially will be a one-term president. To his credit, he contested the election from the back-of-the-pack from the beginning. Although there is some question whether he truly believed the polling data that had him losing badly, one thing is clear - he made no attempts to systematically affect the voting in order to help himself or hurt others. Despite some concerns about use of "administrative resources" at his disposal, he generally campaigned and lost. And in doing so, he provided evidence of the most basic achievement of the 2004 "orange revolution" protests that swept him to power.

Yushchenko's "orange revolution" ally PM Yulia Tymoshenko also apparently rejected the voting schemes used by her predecessors even though she trailed by up to 20 points in opinion polls prior to the election. Also like Yushchenko, she generated concerns over "administrative resource" use, particularly by combining her position with campaigning. But, in essence, she campaigned and finished second.

What other former Soviet country would find the sitting PM and the sitting President finish second and fifth, respectively?

As she heads into the February 7 run-off, Tymoshenko appears calm. She called for unity among the "democratic forces" during her remarks Sunday in a bid to attract voters who had cast their votes for other candidates. But, even this unity may not be enough.

Her two most plausible election opponents from the "democratic forces" are President Viktor Yushchenko and former parliament speaker Arseniy Yatsenyuk. Together, they earned only around 12% of the vote combined (Yatsenyuk with 7% and Yushchenko with 5%).

On the other hand, Tyhypko's strongholds are regions where Tymoshenko has little support, suggesting that his voters may be more predisposed to vote for Yanukovych. These votes, plus Yanukovych's core 35%, as well as the roughly 3.5% cast for the head of the Communist Party, could potentially put him over 50%.

It will, therefore, be essential for Tymoshenko to convince Tyhypko to support her presidency bid and to stop his voters from migrating to Yanukovych.

Tyhypko put a crimp in that plan immediately after conceding, however. He said he will not be supporting either candidate and urged his voters to make up their own minds.

Is this a negotiating tactic or the final position of someone looking at his political career with a longterm view? Tymoshenko must hope it is the former.

The latest results from Ukraine (10 AM local time) show the gap between first-place Viktor Yanukovych and second-place PM Yulia Tymoshenko slightly narrowing as more votes are counted. Nevertheless, the Prime Minister will have a huge job ahead of her in the second round on February 7. She likely will finish 10 points behind Yanukovych when first-round votes are fully counted.

Reports from those at President Yushchenko's headquarters suggest that Yushchenko appears exhausted and deflated. "His situation is finally sinking in," said one who asked not to be identified during an email exchange. The man who rode to power on the back of a "revolution" will finish fifth and with single digits just five years later. Ironically, it was his support for a free and fair election in 2004 that made it possible for voters in 2010 to replace him in what appears to be a free and orderly manner.

As of 8:50 AM Ukraine time, Ukrayinska Pravda reports that 71.57% of Ukraine's presidential election ballots have been counted.

These early results show a wider gap than predicted by the normally very reliable "National Exit Poll," which is a consortium of respected polling firms. That poll had predicted a gap between first-place Viktor Yanukovych and second-place PM Yulia Tymoshenko of about 4 points.

Third place Serhiy Tyhypko already has ruled out endorsing either Yanukovych or Tymoshenko, although in Ukraine politics, never is rarely never.

Ukraine's regions are not reporting their results uniformly, although all are generally in the same ballbark. Because of the regional differences, these numbers likely will shift somewhat before they are fully counted, with the best guess of many being that Tymoshenko will be about 10 points behind.

Sunday, January 17, 2010

Some exit poll information below from today's presidential election in Ukraine. Gap between first place Yanukovych and second place Tymoshenko seems to range from four points to 11 points depending on poll. The most historically reliable source has a four point gap. If that poll is correct it would either be a remarkable surge in the last days or proof that PM Tymoshenko still polls way under actual election results.

Saturday, January 16, 2010

A ruling Saturday by the Kyiv Administrative Court requiring medical certificates for those who will vote at home caused confusion this morning as Ukraine's presidential election polls opened.

Just after midnight early Saturday morning, the court ruled on a complaint that home voting procedures were not appropriate. The parliament had allowed voting at home even for citizens without proof of disability. PM and presidential candidate Yulia Tymoshenko has claimed that these loose regulations allow fraud.

According to the Bloc of Yulia Tymoshenko (BYUT), this weekend's ruling means that voters must produce a medical certificate and have demonstrated difficulty moving outside of their home.

For those unfamiliar with this procedure, a special portable ballot box is taken to the homes of voters on a previously approved list. The law requires that a ballot is given to a voter, and that the voter marks it with no assistance from voting officials. It is required to be a secret ballot.

In 2004, although many regions were praised for their home voting procedures, this writer witnessed a scuffle in a Kyiv polling place, when a political party election observer claimed double the number of ballots were returned in the portable ballot box than were originally provided to officials visiting homes. Additionally, in some areas, the number of those voting at home increased throughout voting day. Following the second round of the 2004 presidential election, the home voting procedures were tightened. For the first time, medical certificates were required when requesting to vote at home.

In 2009, Ukraine's parliament removed the requirement of a medical certificate for the home voting procedure. Kyiv's Administrative Court now says that legislation is in error.

As of Saturday, three Eastern regions had the highest number of home voters - Donetsk (95,000,) Luhansk and Kharkiv (56,000). These three regions account for almost 20% of all home voting ballots.

BYUT further claimed that in some cities of Donetsk, up to 10% of the population was registered vote at home.

The Bloc's press service released the following: "In 8 out of Donetsk oblast 22 voting districts the number of home-voting requests tops 10%, with over 11% in the other 4 districts. Such statistics are in stark contrast with other Ukraine oblasts where in the majority of voting districts the number of voters willing to vote at home does not exceed 0.5 – 1% of the registered voters."

BYUT did not release the actual data on which it based this press release.

It is impossible to know if these numbers are indeed larger than they should be statistically.

The Ministry did not announce the official number of voters in Donetsk. But the Donetsk region contains almost 10% of Ukraine's population, or about 4.8 million persons. The number of requests naturally would be larger than the total number of requests in other regions.

Moreover, Donetsk is a mining/industrial region. There is every reason to believe that there could be a higher number of disabled voters in Donetsk than in other areas.

Regardless, Interior Minister Yuri Lutsenko did announce that the voting rolls included 36, 881, 300 persons throughout Ukraine. If Donetsk's voting population is also 10% of the country, or around 3.6 million, 95,000 at home votes would seem a realistic number. But, again, there's no way to know or sure.

Given past problems with home voting, concern is understandable, and home voting statistics may be some of the most interesting to come following the election -- as will BYUT's comments about the issue. The Bloc's pre-election statements and current confusion provide an interesting jumpstart to potential fraud complaints.

Friday, January 15, 2010

On January 14, the Voice of America held a roundtable discussion dealing with Ukraine's Presidential Election, the first round of which is held this Sunday.

Below are two videos of the event provided by the VOA.

The roundtable was hosted by Myroslava Gongadze and included Damon Wilson of the Atlantic Council, Nadia Diuk of the National Endowment for Democracy and David Kramer of the German Marshall Fund.

Part 1 includes discussion of the improvements in the electoral process since 2004, in particular the increase in choice provided this year. Nadia Diuk suggests, however, that the positions of the two top candidates are very close in many areas, and this has caused some disillusionment among voters.

Part 2 deals with US-Ukraine relations and the need, according to panelists, to broaden support for Ukraine in the US beyond the political elite of the country. Also, what should the priorities of Ukraine's new president be?

As an aside, I appreciated Nadia Diuk's apparent decision not to use any candidate names.

The question as to the actual Chinese population in Russia has been a highly contested debate since the collapse of the Soviet Union. Russians, acutely aware of the vacuum being created by the decline of Russia’s population and by the parallel growth of China’s, point out that the situation in the Russian Far East is both unprecedented and unsustainable. On one side of the border are China’s Heilongjiang, Jilin, and Liaoning provinces – home to over 107 million people. On the other side are the four southern provinces of Russia’s Far East (RFE) - Amur Oblast, Jewish Autonomous Oblast, Primorskii Krai, and Khabarovks Krai – with a combined population of a little more than 3 million people. Russians from the western part of the country, unfamiliar with the reality of the situation in the East, imagine China as a giant teapot – slowly pouring its excess population into the pristine Russian basin. For instance, in 2007 Russian politician Dmitry Rogozin spoke of Chinese migrants crossing the Amur River in “small groups of 5 million”. Russian pundits such as Radio Free Europe's Aleksandr Golts and Echo Moskvi Radio's Yulia Latynina have repeatedly warned of the Eastern provinces being overrun by Chinese migrants. Even western observers such as David Wall have cited concern of an impending avalanche of Chinese migrants. These fears, however, are highly overblown.

According to the latest Russian census (2002) there were only 35,000 Chinese living in the whole of Russia! This number, however, excluded seasonal workers such as shuttle traders, tourists, and illegal immigrants. In fact, it is general consensus that the overall number of Chinese in Russia is between 400,000 and 500,000. It is estimated that approximately 75% of them are in Russia legally and another 25% illegally.

Generally speaking, the Chinese in Russia fall under one of four categories: legal laborers, trafficked workers, traders, and investors. The legal laborers compose the largest percentage of Chinese migrants as their dexterity, diligence, and sobriety compares favorably with the typically languid Russian worker. Furthermore, they are willing to perform jobs that Russians do not want and to work for wages that Russians would not accept. Oftentimes, these workers are willing to live in deplorable conditions as attested by the Hooverville-like shacks around Moscow City. Sadly, not all of these workers are in Russia on their own accord. The Chinese Triads are highly influential in Russia and often work in conjunction with the Russian Mob to traffic workers for hard labor. Most such trafficked individuals, however, are prostitutes, not laborers. It’s unclear just how many Chinese women have been lured into Russia by traffickers, but the number is certainly in the thousands. For instance, there have been numerous reports of a Chinese-only brothel being operated by the Triads on Prospect Mira – right in the center of Moscow.

Chinese traders are highly prevalent both in western and eastern Russia. In the East, they often work as peddlers or shuttle traders. However, a Russian law passed in April of 2007 prohibited Chinese (and other foreigners) from carrying out cash transactions and thus led to a significant reduction among Chinese crossing the border. According to British Sinologist, Bobo Lo, shuttle trading has increased since 2007, but is now almost entirely conducted by Russians. Still, a number of Chinese do decide to stay and set up shop in Russia. Often, this is due to marriage and, in fact, intermarriages between Russian women and Chinese men have increased dramatically in recent years. There are also those who consider life in Russia to be superior to that in China. This is generally a rare opinion for Chinese living in the RFE, where large majorities would prefer to return to China. In Moscow, however, over 65% of the Chinese traders say that they are interested in obtaining Russian citizenship or becoming permanent residents. This opinion is certainly not due to the legendary benevolence and hospitality of the Moscovites. According to surveys conducted by Russia’s Demoscope Weekly, Chinese residents in Moscow face the greatest amount of prejudice and discrimination in all of Russia (alternatively, the best city for the Chinese to live is Khabarovsk). However, unlike other parts of Russia, Moscow presents Chinese residents with ample opportunities to make money. Until 2009, Chinese traders in Moscow operated hundreds of small businesses in the expansive Cherkizovsky market. The market was closed last year, ostensibly to make room for public housing, but more likely due to the blatant corruption that was taking place at Cherkizovsky. Apparently, the market even had its own security force and Moscow police didn’t dare collect bribes from the merchants operating there. The market put a temporary dent in the profit margins of traders, but did little to stymie the resourceful Chinese who moved to other forums such as Sevastopol and Balashikha. There is now word of a “new Cherkizovsky” being opened in the Lenin district of Moscow, sponsored both by the Chinese Diaspora and by the Chinese government.

There are also some private Chinese investors in Russia, but they are surprisingly few and far between. In 2008, Chinese Foreign Direct Investment in Russia was approximately $3 billion – equal to 5% of overall investment by foreigners in Russia and approximately 2% of overall Chinese FDI throughout the world. Moreover, most of the Chinese investments were made by large state-owned enterprises, not small or medium sized businesses. On the bright side, there has recently been a piqued Chinese interest in Russian real estate after the Beijing real estate giant, Jin Yuan, announced plans to invest 1 billion dollars into development of projects in Moscow. However, most Chinese investments take place in western Russia because corruption, unreliable business practices, and downright fraud have kept Chinese investors away from the Russian Far East. Often, Russians in the RFE oppose any type of Chinese investment for fear that it will result in a wave of Chinese migration. For example, the “twin cities” of Heihe and Blagoveshensk, lying on opposing sides of the Amur River, still do not have a bridge connecting them despite numerous attempts by Chinese companies to construct such a conduit. Russian authorities simply will not allow it. Nikolai Kukharenko, a resident of Blagoveshensk, puts the Russian view into perspective: “it’s a law of physics that a vacuum has to be filled. If there are no Russian people here then there will be Chinese people”. So far, the vacuum remains vacant, but Kukharenko is not taking any chances. He runs the Chinese-sponsored Confucius Institute in Blagoveshensk.

Thursday, January 14, 2010

On Wednesday, the Associated Press distributed an interesting article, which appeared in numerous papers including the New York Times.

“Orange Leaders Face Shutout in Ukraine Election,” the article said, quoting a new poll by the Russian VTsIOM polling agency regarding the first round of Ukraine’s presidential election to be held this Sunday. The poll, conducted from Jan 3-10, found that former central bank head Serhiy Tyhypko had moved slightly ahead of Prime Minster Yulia Tymoshenko into second place, with 14.4% versus 13.9%, respectively. The poll’s margin of error is plus or minus 4%. First place remains solidly within the grasp of former Prime Minister Viktor Yanukovych (30.5%).

If true, and if these percentages prove to be accurate during the election, Tyhypko, not Tymoshenko, would meet Yanukovych in the second round on February 7. It would be a stunning development; a Yanukovych-Tymoshenko second round has been viewed for months as a virtual certainty by observers and political leaders alike.

There is no doubting that Tyhypko has experienced a popularity surge since November. A survey of polls from September to December shows Tihipko’s rating increasing from 1.6% in September to 5.7% at the end of November, according to the FOM-Ukraine agency, and from 3.6% in October to 7.4% in mid-December, according to the Research & Branding Group. The Kyiv International Institute of Sociology also found Tihipko’s rating at around 7% in a poll ending on December 24. Given Tyhypko’s trajectory there is a possibility that his rating jumped from around 7% to 14% in just several weeks. But that possibility is very, very slim. (A table containing the FOM-Ukraine and Research & Branding Group polls is found here.

What is certain is that the VTsIOM polling agency is fully owned and run by the Russian government, after a forcible takeover of the formerly independent firm in 2003 by the Russian Property Ministry. Given Russia’s past use of polls to influence elections or declare winners (who weren’t), this poll is naturally suspect. It could be free of any manipulations, and the numbers for Yanukovych and Tymoshenko do appear in the ballpark of other polls. But alternatively, could this mean that Russia has a new favorite in the race – or at least another viable option?

Unlike in 2005, Russia has generally avoided direct public involvement in this election. However, Prime Minister Vladimir Putin’s repeated agreements with Tymoshenko to forestall any gas crisis could be viewed as tacit support, and his praise of Tymoshenko has also been frequent. Nevertheless, despite rumors of a falling-out, Yanukovych is still able to claim Moscow’s ear, and portrays himself as best able to work with Russia. Neither Putin nor President Dmitry Medvedev has made an obvious choice.

So as Ukrainians head to cast their votes, this new poll generates interesting questions. If the numbers are realistic and do show a Tihipko upset in the making, the result would drip irony in two important ways:

And finally, in 2004, Tyhypko was widely believed to be the best, most credible candidate to challenge then-opposition leader Viktor Yushchenko for the presidency on behalf of then-President Leonid Kuchma. For reasons still not understood, he was overlooked in favor of Yanukovych. Yushchenko then won, following the “orange revolution” protests.

It seems everyone will be watching the first-round results a bit more closely than originally planned.

Tammy can be reached on twitter @TammyLynch. For Ukraine election news on twitter, follow @UkraineElect and @Internews. Also, use #elect_ua for all election-related tweets in any language, and view them on www.electua.org.

Wednesday, January 13, 2010

In 2014 the Russian Black Sea coastal city of Sochi, located a few kilometers north of the Russian-Georgian border across the Psou River, will host the Winter Olympic Games. The Russian leadership considers the Sochi Olympics as a manifestation of Russia’s pride and growing great power status and attaches “state significance” to the due preparation for the Olympics.

Sochi is a city in the Krasnodar region, which has one of the worst corruption and human rights records across the vast domains of the Russian Federation. Russian human rights organizations have reported facts showing that property rights of individuals in Sochi and in adjacent areas have been constantly violated by the authorities and construction companies they lobby, who strive to make room for the building of Olympic facilities, but in fact are trying to enrich themselves on the already skyrocketing real estate prices (Segodnia.ru, June 8, 2009, http://www.segodnia.ru/index.php?pgid=2&partid=11&newsid=8812). Some Russian sources allege that a lack of transparency and dubious deals characterize tenders organized by the Russian authorities for the needs of future Sochi Olympic sites (Segodnia.ru, June 8, 2009, http://www.segodnia.ru/index.php?pgid=2&partid=11&newsid=8812).

Also, considering the poorly developed infrastructure such as railroads, paved motorways and bridges around the city of Sochi, Russia needs to either transport construction materials from distant parts of the country, which would be both costly and time-consuming, or find “more economical,” albeit illegal, ways of dealing with this arduous task. Moscow hopes that the Russian-occupied Georgian region of Abkhazia can be a “viable alternative.”

Apart from outstanding political aspects, a harmful impact on Georgia’s environment, analysts believe, is yet another dimension of the Sochi Olympics. Georgia’s Abkhazia region bordering on the Sochi area is rich in mineral resources, including construction material such as sand, stone and timber and has infrastructure for transit and transportation, namely roads and railroads. Located very close to the future Olympic city, resources found in the Russian-occupied Georgian region have the potential Moscow deems essential for its construction efforts at Sochi (Online Russian Constructor Magazine, March 11, 2008, http://www.i-stroy.ru/docu/mpp/kozak_podryadchiki_smogut_zakupat_v_abhazii_stro/14887.html).

Ever since Russia was granted permission to hold the 2014 Olympic Games in its Black Sea city, it escalated efforts to make good use of the construction material available on the Georgian side of the border. By recognizing Abkhazia as an independent state, Russia, among other things, freed itself from an immediate obligation to seek Georgia’s consent for the use of resources from Abkhazia. Nonetheless, there is evidence that Moscow started to explore and exploit the “southern option” much earlier, at the beginning of 2008. Thus, months before Russia’s aggression against Georgia and consequent military occupation of the Abkhazia region, representatives of the Russian government had on many occasions expressed readiness to arbitrarily utilize resources in the neighboring country (Online Russian Constructor Magazine, March 11, 2008, http://www.i-stroy.ru/docu/mpp/kozak_podryadchiki_smogut_zakupat_v_abhazii_stro/14887.html).

From March to May 2008 – when Russia still formally acknowledged the Abkhazia region as part of Georgia’s sovereign territory – high-ranking Russian officials had openly stated that Moscow was intending to extract from the deltas of coastal rivers of Georgia’s Abkhazia region some 120 million cubic meters of construction material such as stone and sand and export them to the Russian Federation to meet infrastructure needs of the Sochi Olympics (Segodnia.ru, June 8, 2009, http://www.segodnia.ru/index.php?pgid=2&partid=11&newsid=8812).

Georgia fears that in the course of the illegal extraction of inert materials the unique and fragile environment of the subtropical Black Sea coastal zone immediately south to the Georgian-Russian border will suffer a heavy and irreparable damage. This will include beaches, mountains, rivers, lakes and valleys as well as the picturesque flora and fauna of northwestern Georgia. Erosion of the coastal area and the riverbanks will be one of the many dire consequences. Addressing the Summit on Climate Change at Copenhagen on December 18, 2009, President Saakashvili said: “Olympic Games must serve peace and human aspirations, though it has become the reason for destroying the nature. The process of erosion resulted in climate changes and landslides, the results of which are already felt” (official website of President of Georgia, December 18, 2009, http://www.president.gov.ge/?l=E&m=0&sm=3&st=0&id=3128). It was the first time the Georgian leader brought up the issue of the Sochi Olympics at an international forum.

The only time in history when Russia has had the honor to host Olympic Games was in 1980. Notably, they were held one year after the Soviet invasion of Afghanistan in 1979 and thus without the participation of Western democracies. This time, too, Russia has invaded a neighboring sovereign nation in the run-up to the Olympics, but unlike in past experience it did so soon after securing the status of Olympic host in 2007, and a good five years before the event was due in 2014. Apparently, by allowing more time between the invasion and the hosting, Russia’s current leadership wants to avoid the repetition of the 1980 international fiasco. Many analysts believe that the international community should take immediate and decisive steps to make Russia comply with its international obligations, including the obligations under the Olympic Charter.

Thursday, January 7, 2010

Georgia’s former Prime Minister Zurab Noghaideli who currently serves as the leader of the opposition Movement for a Just Georgia and is one of the fiercest critics of President Saakashvili visited Moscow several times in December 2009 to meet with some influential figures in the Russian political establishment. But in a quite unexpected development, during his latest trip to the Russian capital on December 23 he met with Vladimir Putin, and it was for the first time that the Russian prime minister openly received a Georgian oppositionist.

According to the Russian premiere’s official website, Noghaideli did not meet with Putin tête–à–tête. Rather, the meeting was also attended by Chairman of the Supreme Council of the United Russia party Boris Gryzlov and Moscow Mayor Yury Luzhkov who sat at the sides of the table, underscoring hierarchy among the participants.

Surprisingly enough, the formal subject of the discussion “was not political” but Vladimir Putin’s recent initiative “to restore the monument to Great Patriotic War heroes” in Moscow. http://www.regnum.ru/news/fd-abroad/georgia/1238120.html) The monument which had stood for a few decades in Georgia’s second largest city Kutaisi was demolished by the Georgian authorities on December 19 to clear the area for the construction of a new parliament building. The implosion of the Soviet-era monument caused a real brouhaha all across Russia and became yet another reason for the Kremlin to condemn the Georgian government. The Russian foreign ministry promptly issued a statement calling the demolition of the monument “ state vandalism” and “ blasphemy.” and Vladimir Putin on his part soon stated, “this is sad testimony to the fact that [the Georgian government’s] political agenda is contrary to the people's interests” according to the official website of the Prime Minister of the Russian Federation, December 23, 2009, http://premier.gov.ru/eng/events/news/8686/). Once again, the Russian leadership attempted to draw a clear line between its relationship with the Georgian government and “the ordinary Georgian people,” claiming all along that it would have no relation with the current authorities in Tbilisi but would build partnership with those who still consider the Soviet Union “our common Fatherland.”

Noghaideli’s response to Putin’s initiative was reciprocal. He said: “I would like to thank you, Mr Putin, for the initiative to rebuild the monument here in Moscow…but in my view, our prime objective is to restore this monument in Kutaisi, where it belonged. We pledge to do so as soon as we come to power.” The Georgian oppositionist also added: “in my opinion Saakashvili is pursuing political goals and intends to sever the remaining ties between Russia and Georgia. I believe this issue is also worth discussing.”

It remains unclear from the transcript available on the Russian prime minister’s official website whether or not the participants of the discussion touched upon political issues but many in Georgia allege that they could not avoid “the question of Saakashvili.”

As Georgia has started to move away from its Soviet past – and with that the Russian political orbit – over the past several years following the peaceful Rose Revolution in 2003, the Russian leadership has had several attempts to destabilize or outright oust the government in Tbilisi. Economic pressure and other “soft” means all failed one by one to produce the result the Kremlin hoped for. Even the war in August 2008 did not bring about “a regime change” in the Georgian capital. Similarly, pro-Moscow figures have all been unsuccessful so far to attract hearts and minds of the Georgian public. Until very recently, the Russian leadership looked to favor such marginal personalities of Georgian origin as Georgia’s ex-KGB chief Igor Giorgadze or Alexander Ebralidze, who leads a Moscow-based pro-Kremlin organization.

As it appears from the highly publicized meetings held by Noghaideli with the Russian political establishment, the Kremlin seems to have moved to a more or less mainstream Georgian political spectrum to achieve its strategic objectives vis-à-vis Georgia It could also be true that Georgia’s former prime minister who served under President Saakashvili until two years ago and is better familiar with Georgia’s current political and economic situation is just the tip of the iceberg directed toward the pro-Western Tbilisi from Russia’s icy waters.

Monday, January 4, 2010

An extensive study has revealed how little information Ukraine’s largest banks are willing to share about their finances and their management.

Ukrainian banks are “troeshniki” (C students) in information disclosure: They disclose only 48 percent of the information they should be revealing by international standards, according to the extensive research done by Standard & Poor’s and Ukraine’s Financial Initiatives Agency, with support from USAID’s Capital Markets Project.

Such a level of transparency is insufficient for investors, both foreign and domestic, who, particularly in times of crisis, tend to look closely at where they put their money. It is also insufficient for the general public. After all, Ukrainians are themselves already investors in the financial sector, and their deposits allow banks to function, invest, and lend. These ordinary Ukrainians’ deposits are the lifeblood of any bank – as the recent bank crisis in Ukraine shows.

Timely and accurate information disclosure is critical. It is the foundation that stable banks and corporations are built upon. Without proper disclosure about their business, finances, and management, banks cannot become the pivotal financial institutions the market (and the people) need. Why?

First, disclosure standards are like x-ray goggles, giving an almost unobstructed view of the inner workings of a bank.

Second, adequate information disclosure acts as an early warning system when something is wrong with a financial institution. Disclosure requirements concerning financial statements force companies to publish data that tell market experts about possible dangers, like overexposure to foreign debt or nonperforming loans. An ordinary bank deposit holder would also get advance notice of possible problems. Banks, knowing this, would possibly adapt their strategy to make it less risky.

Disclosure rules about management and its structure force companies to reveal who the people running the company are: what is their education, their previous work experience, and their business and personal reputation? In well-regulated markets, the motto is: “Disclosure is the best disinfectant, and sunshine is the best policeman.”

Information disclosure rules also act as a deterrent to affiliated party transactions and other abuses: the chances are greater that a manager will resist temptation to use the bank as a cookie jar if he knows its finances are transparent. And so are the chances that he will abstain from hiring his first cousin out of family loyalty.

But for now, information disclosure by Ukrainian banks is insufficient to satisfy these needs.

That said, many market participants and government representatives understand that increasing transparency is crucial. That’s why the Joint Stock Company Law was finally passed last year. Among many other good features, it sets higher transparency standards for these companies.

Another positive step is the Electronic System of Comprehensive Information Disclosure (ESCRIN). It is being implemented by the Securities and Stock Market State Commission (SSMSC) with support from USAID’s Capital Markets Project, as part of USAID’s 15 years of commitment to develop Ukraine’s financial sector.

As soon as the implementation process is over early next year, it will become mandatory for all publicly listed and traded companies to disclose information according to the ESCRIN requirements, bringing Ukraine one step closer to international standards and to building investor confidence in the capital market.

Once ESCRIN is in place, any investor can access the ESCRIN data through the SSMSC website, type in the name of any publicly listed and traded company, and find an unprecedented amount of quality information about the issuer. This information will be in real-time to allow investors to make timely decisions. It will also be free of charge, to allow wide public exposure.

ESCRIN will include descriptive parts, understandable to people who do not have a higher financial education, to people who have bank accounts, mortgages, investments in pension funds -- and, therefore, have the right to know. As these disclosure obligations are being put in place, they have to be enforced in a timely and -- once again! -- transparent fashion.

Ukraine is taking essential steps to develop its economy in accordance with international best practices for all its citizens. Yes, the crisis continues adversely to affect Ukraine and its citizens, but it can also show the way to a more vibrant, honest, and transparent economy.Paul Richardson is the USAID acting director of the Office of Economic Growth of the U.S. Agency for International Development (USAID) in Kyiv. The views expressed in this commentary are the author's own and do not necessarily reflect those of the U.S. government or RFE/RL.

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